Any successful business is always looking towards what comes next. Keeping ahead of change means watching trends, anticipating staffing and leadership needs, and planning for the future. Nationwide founders, officers and owners are researching business transition options as retirement age approaches.
For SCJ Alliance, the next step was clear, though not exactly simple. They decided to keep the business in the family, so to speak, by becoming 100 percent employee-owned through creating an Employee Stock Ownership Plan and Trust (ESOP).
SCJ Alliance employs just over 100 people and has eight offices across Washington State, including one in Centralia, as well as one in Boulder Colorado. They have extensive expertise in engineering, transportation, cable-propelled transit, landscape architecture, and planning. To plan for their own future, they’ve spent the last few years putting the pieces in place to become employee-owned.
“Employee ownership can be accomplished in a variety of ways,” explains the National Center for Employee Ownership (NCEO). “An ESOP is a kind of employee benefit plan, similar in some ways to a profit-sharing plan. In an ESOP, a company sets up a trust fund, into which it contributes new shares of its own stock or cash to buy existing shares…Shares in the trust are allocated to individual employee accounts.”
“It’s a very complex process,” admits Jean Carr, SCJ’s president, CEO, and co-founder. “We took our time to make sure we were doing it in a way that worked for our firm and our employees. Getting to this point though says Carr, involved three federal regulatory agencies and the hiring of an outside ESOP trustee. The process also included external evaluators, multiple attorneys and plenty of red tape.
“Even in the early days when we started SCJ Alliance, we looked to the future,” said Carr. “We love what we’ve built and we value our staff. It was important to us to be able to reward everybody for their dedication and commitment, as well as preserve our unique culture.”
ESOPs are most often implemented by shareholders who would rather see their company continue with employees as the new owners, rather than selling to a competitor or private equity group and that was the case for SCJ. “This transfers ownership to our employees and keeps the team together,” says Carr.
Centralia Office Principal Brandon Johnson echoed Jean’s thoughts, “In a company where we already have an award-winning culture and a staff full of fun, motivated, engaged and innovative people, transitioning to an employee-owned company was a no brainer.”
NCEO experts report that ESOP companies “grow 2.3% to 2.4% faster after setting up their ESOP than would have been expected without it…[And] participants in ESOPs do well. A 1997 Washington State study found that ESOP participants made 5% to 12% more in wages and had almost three times the retirement assets as did workers in comparable non-ESOP companies.”
This is due in part to employees knowing the company’s overall success increases the price of the stock, which annually is independently valued and allocated to employees at no cost to themselves. If everyone works hard and succeeds, the worth of their retirement shares grows.
The process to create an ESOP was completed in September 2019 and this fall Carr, Eric Johnston, SCJ’s chief operating officer, and the ESOP trustee visited with staff in all offices to explain the process, journey and future.
SCJ opened its downtown Centralia office at 212 North Tower Avenue in the fall of 2016. The choice to open a Lewis County office came naturally and with enthusiasm, as SCJ already had challenging and meaningful work in the community, as well as the staff who lived and played there.
The office started with about five team members and today has 14. In 2020, SCJ’s Centralia office will be doubling its space downtown, providing room for even further growth. Johnson is himself a Centralia native. When the office opened he said, “Continuing my career in Lewis County is a lifelong dream of mine.”
A successful project at SCJ includes personal and professional satisfaction, a positive impact on the community being served and enhanced relationships. Follow their adventures on Facebook or the SCJ Alliance website to learn more.
Astronaut John Glenn once said “I’m not interested in my legacy. I made up a word: ‘live-acy.’ I’m more interested in living.” Now that they’re 100 percent employee-owned, SCJ Alliance can go forth and seek the next chapter in their unique live-acy too. Explore their portfolio online or reach out to see how they can help your business, city and region thrive.